As we approach the end of 2025, here’s what you need to know about tax changes that could affect your charitable giving strategy now and in the future. The recently enacted One Big Beautiful Bill Act introduces several key tax changes effective in 2026—and combined with recent adjustments to the state and local tax deduction cap, more commonly known as SALT, these changes may influence how you support the causes you care about.
Why SALT Matters
The SALT deduction cap, which limits state and local tax deductions, has historically reduced the number of taxpayers who itemize. Fewer itemizers means fewer people receive a tax benefit for charitable gifts. While OBBBA temporarily raised the SALT cap to $40,000 for 2025, this incentive may shrink again in 2026 when new charitable deduction floors and limits take effect. Timing your gifts could make a big difference.
Key Highlights
- Above-the-line deduction returns for non-itemizers: Starting in 2026, taxpayers who do not itemize can deduct up to $1,000 (individuals) or $2,000 (married filing jointly) in cash donations to qualified charities.
- New limits for itemizers and high-income donors: Charitable deductions will only apply to contributions exceeding 0.5% of adjusted gross income, commonly known as AGI. Example: If your AGI is $200,000, only donations above $1,000 are deductible.
- Corporations must give more than 1% of taxable income to qualify for deductions.
- For top tax bracket donors, the maximum deduction rate for charitable gifts drops from 37% to 35%.
Strategic Giving Opportunities in 2025
With the higher SALT cap and current rules still in place, accelerating your giving before year-end 2025 could help you maximize deductions. Consider:
- Gift bunching or using a donor advised fund (DAF) to lock in current benefits. Click here to learn more about DAFs through the VMI Alumni Agencies.
- Stock transfers to avoid capital gains and receive full deductions. Learn more by clicking here.
- IRA charitable rollovers for those age 70-and-a-half or older, allowing tax-free transfers up to $108,000 per individual in 2025.
- Making a one-time gift of $54,000 from an IRA to establish a life income gift, such as a charitable gift annuity, for those age 70-and-a-half or older.
Act now: Consult your financial advisor or tax professional to determine the best strategy for you. Your generosity makes a profound difference—and with these changes, timing and planning can amplify both your impact and your tax benefits.
If you are interested in making a year-end gift, please email give@vmiaa.org or call 800-444-1839.
